Hey, Sharon, today we're gonna be talking about the mega backdoor Roth. The mega backdoor Roth, you know, we've talked about doing a backdoor Roth IRA. There's a difference between the mega backdoor Roth and just the backdoor Roth. So whenever the Roth, we'll just quickly go through this so everybody understands again. The sizzle behind the Roth is that you put the money in there on after tax. That's not really a sizzle, but you let it grow tax deferred, and then you can pull it out tax free. So if we can get money in there now and not pay taxes later and it grow, what a wonderful world. What a wonderful world we live in, right? So you can also take out contributions and earnings. You can have more flexible withdrawals during retirement. So now you can have some in taxable, some in non-taxable, and it really just diversifies that retirement savings that you've got. And you've heard me talk about this. And again, I probably said this ad nauseum as well. I truthfully don't believe we're gonna be in a lower tax environment in the future than we are today. Or ever again. Ever again, right? So the mega backdoor Roth, I think has a place. I think the backdoor Roth IRA has a place as well. So traditional Roth contributions. So traditional Roth IRAs are capped 7,000 this year. So you can put in 7,000, which if you're making a lot of money, that's really not a lot of money to be able to put in. So the contribution limits are kind of low for Roth IRAs, right? And as we talked about in the backdoor Roth section, the majority of our CRNAs we're gonna cap out and not be able to contribute, which is the reason we have to do the Roth. And remember that you don't get the tax breaks on this because they're after-tax contributions. So those are some of the limitations on Roth contributions. But how does the mega backdoor Roth work? So the difference between the mega backdoor Roth and the backdoor Roth is the fact that the mega is actually done in your 401k plan, whereas the backdoor is done in an IRA. Your 401k plan needs to be able to handle after-tax 401k contributions. So basically, you know, Sharon, you can put in up to a certain amount, your company can match you, and then you can also do after-tax contributions under something called the section 415 limit. And we'll talk about that in just a minute. You also are gonna have to be able to convert those contributions either to a Roth IRA or to a Roth 401k in the plan. So we'll talk about that in just a minute as well. But there's no income limitations, Sharon. So if you can participate in a 401k, you can do this strategy as long as they allow after-tax contributions and they allow you to convert it in the plan. So the mega backdoor Roth, you actually bypass all those income restrictions that we have with the Roth IRA. There are some eligibility requirements here though. Like I said earlier, your plan first must have the option to make after-tax 401k contributions. Now I will tell you the solo 401ks that we set up, we always have after-tax as an option in the plan because of just this reasoning, okay? Because that is really what makes this engine go. Now, you also need to go ahead and make all your pre-tax contributions as well. So you make your pre-tax, you get a match, and then you do after-tax, okay? But it does require some financial discipline because you're stocking away a lot of money this way. Those are kind of how it works. So it gives you that tax advantage growth, tax-free withdrawal. So let's kind of run through a scenario. Sharon, do you know what the 415 limit is in 2024? And if you do, I'm probably gonna give you a million dollars. You can't Google it, you gotta tell me now. No, Clay. Yes, say that, $69,000. So what that means is between what you defer as an employee and your company matches. So let's say that you defer $30,000. And let's say we pay you a salary of 120, okay? So you could do 25% profit sharing from the company. So you put in 30, the company puts in 30. Now, the section 415 limit is 69. So now you take another $9,000 and you put in after-tax. You put it in after-tax, we then, because we have the provision in our plan document, we then take that after-tax and we put it over into the Roth 401k. But this is really, it's simplistic in nature once you understand it. But your employer either has to offer you what's called an in-service distribution. That means you could take it out of the plan and convert it to a Roth, even while you're still working, or it's gonna offer you the provision that you can take it from after-tax in the Roth 401k. So it's a great way, I always tell people this, if you're gonna save money in non-qualified accounts anyway, you should definitely be doing the Roth because this money's never gonna be taxed again. And not only are you getting the benefit of getting it in the plan, you're getting the benefit of all the growth and everything that goes along with it never being taxed again. So why save outside of your plan when you can save in the plan and get all the tax benefits, whereas outside, you're gonna pay capital gains tax, maybe ordinary income tax if you hold it for longer than, shorter than 12 months. But inside, you never have to be worried about that taxation again. So that's the reason they call it the mega backdoor Roth. And there's other provisions, but let's say, for example, the people that haven't reached that age that they can save more in their retirement plan, let's say that they saved 23,000 in their pre-tax back to the scenario, we paid them 120, they could do 30 there, 53,000 between the employer and the employee. And then they could save another 16,000 in the after-tax and take that to the Roth, thereby effectively getting $16,000 in the Roth that they wouldn't have gotten before. And oh, by the way, just because you do the mega backdoor Roth doesn't mean you can't do the backdoor Roth as well and stick another 7,000 in there, effectively getting $23,000 into the Roth a year and getting the tax deductions of the pre-tax on the way. It's a great way to save for retirement and people that are behind the eight ball. That was my next question. If you're behind, wouldn't this be a great way to catch up? Absolutely. But you gotta understand it. I mean, most people have not heard of Section 415 and how much you can save and the limits in there. We wanna bring this out because if you're talking to your advisor and they haven't mentioned this to you or you are behind the eight ball saving for retirement, look at these strategies. That's what they're there for.

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